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BECTON DICKINSON & CO (BDX)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue $5.168B (+9.8% reported; +3.9% organic) and adjusted EPS $3.43 rose 28% YoY, both ahead of internal expectations; adjusted gross margin expanded to 54.8% and adjusted operating margin to 23.6% .
  • Guidance: FY25 adjusted EPS raised at midpoint to $14.30–$14.60 (from $14.25–$14.60), while reported revenue range trimmed to $21.7–$21.9B to absorb a larger translational FX headwind; organic growth (FXN) maintained at 4.0–4.5% .
  • Strategic catalyst: BD announced intent to separate Biosciences and Diagnostic Solutions, creating “New BD” as a pure‑play MedTech leader and a pure‑play Life Sciences Tools & Diagnostics company (target completion fiscal 2026) .
  • Capital returns: $750M repurchased to date in FY25; Board authorized up to 10M additional share repurchases and declared a $1.04/share quarterly dividend .
  • Versus Street: External consensus pointed to beats on revenue ($5.10B) and adjusted EPS ($2.98), implying strong upside in Q1; S&P Global consensus retrieval was unavailable (see Estimates Context) .

What Went Well and What Went Wrong

  • What Went Well

    • Margin execution: adjusted gross margin +370 bps and operating margin +340 bps YoY, driven by BD Excellence productivity and simplification initiatives .
    • Product momentum: double‑digit growth in PureWick (UCC), Infection Prevention and Phasix (Surgery), strong Infusion growth with BD Alaris, and healthy volumes/share gains in Vascular Access and hypodermic products .
    • Strategic step: separation plan to unlock value and sharpen focus, with “New BD” organized into four operating segments (Medical Essentials, Connected Care, BioPharma Systems, Interventional) .

  • What Went Wrong

    • Biosciences softness: transitory market dynamics and reduced research funding in China/U.S. pressured instruments and reagents; management remains cautious on timing of recovery .
    • Pharmaceutical Systems: lower near‑term demand from customer destocking in anticoagulants/vaccines offset strong biologics/GLP‑1 demand .
    • FX/China headwinds: FY25 revenue guide lowered to absorb an increased ~$250M translational FX headwind; organic growth still derisked but China expected to decline mid‑single digits in 1H .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$4.990 $5.437 $5.168
GAAP Diluted EPS ($)$1.68 $1.45 $1.04
Adjusted Diluted EPS ($)$3.50 $3.81 $3.43
Adjusted Gross Margin %54.3% 54.6% 54.8%
Adjusted Operating Margin %25.2% 26.6% 23.6%

Segment revenue breakdown ($USD Billions):

SegmentQ3 2024Q4 2024Q1 2025
BD Medical$2.558 $2.837 $2.615
BD Life Sciences$1.260 $1.340 $1.297
BD Interventional$1.240 $1.260 $1.257

KPIs (current quarter):

KPI (Q1 2025)Value
Net Cash Provided by Continuing Operating Activities ($USD Millions)$693
Approx. Free Cash Flow ($USD Millions)~$600
Share Repurchases to Date FY25 ($USD Millions)$750
Net Leverage (x)2.9x
U.S. Revenue ($USD Billions)$3.080
International Revenue ($USD Billions)$2.089

Guidance Changes

MetricPeriodPrevious Guidance (Nov 7, 2024)Current Guidance (Feb 5, 2025)Change
Reported Revenue ($)FY25~$21.9–$22.1B ~$21.7–$21.9B Lowered (FX headwind)
Adjusted Revenue Growth (FXN)FY25+8.8% to +9.3% +8.8% to +9.3% Maintained
Organic Revenue Growth (FXN)FY25+4.0% to +4.5% +4.0% to +4.5% Maintained
Adjusted Diluted EPS ($)FY25$14.25–$14.60 $14.30–$14.60 Raised midpoint

Management noted the illustrative translational FX revenue headwind increased to ~($250M), absorbing ~$0.15 EPS, while operational performance allowed a ~$0.175 increase to maintain growth at ~10% midpoint .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Separation strategyN/AN/AFormal intent to separate Biosciences & Diagnostic Solutions; options include RMT, sale, spin; timeline: specifics by end FY25, target completion FY26 New transformative catalyst
Connected Care / AlarisRecord Alaris shipments; healthy backlog; pharmacy automation/AI seen as a $7B opportunity by 2030 Exited year at historical Alaris run rate; continued preference for “Power of One” Q1 double-digit Infusion growth; 510(k) submitted enabling OTA updates; integrated EtCO2 safety module Sustained momentum
China/VBPChina declines; VBP pressure in Oncology (PI) China expected to decrease mid-single digits in FY25; cautious on bioscience pharma Continued China headwinds; cautious research funding outlook; VBP impact moderating in MDS Persistent headwind, moderating in some units
Biologics/GLP‑1 (PS)Double-digit biologics; destocking in anticoagulants/vaccines Double-digit prefilled devices; continued destocking impact Biologics pipeline strong; >50 biosimilar GLP‑1 agreements; near-term destocking still a headwind Long-term positive; near-term mixed
Tariffs/macroN/AN/AMonitoring potential US/China/Mexico/Canada tariffs; largest mfg footprint in U.S.; seeking carve-outs for med devices Watchful
APM integrationN/AClosed Sept 2024; contributed $74M in Q4; integration as expected High single-digit growth, ahead of deal model; R&D integration with infusion platform underway Positive integration progress
Legal/regulatoryN/ASEC investigation accrual and disclosure; EU MDR/IVDR costs Non-GAAP recon details; product remediation and legal items in adjusted EPS bridge Ongoing management

Management Commentary

  • “We delivered strong operational performance in Q1, with revenue growth, margin expansion and earnings per share all ahead of our expectations.” — Tom Polen, Chairman, CEO & President .
  • “Strong margin performance continued to enable outsized investments in selling and R&D to drive growth… adjusted gross margin of 54.8% and adjusted operating margin of 23.6%, up 370 and 340 basis points year-over-year.” — CFO Chris DelOrefice .
  • “The separation… positions New BD as a differentiated MedTech leader and [Biosciences & Diagnostic Solutions] to realize its full potential as a pure‑play leader in life sciences.” — Tom Polen .

Q&A Highlights

  • Separation rationale/timing/options: Process launched in early FY24; decision criteria is maximizing shareholder value; forms include RMT, sale, or spin; specifics by end FY25; target completion FY26 .
  • Q2 phasing: ~150 bps licensing headwind; underlying core organic growth around ~5% excluding licensing; tax rate ~16.8% in Q2, ratable thereafter .
  • Tariffs: Monitoring potential 10% China and possible 25% Mexico/Canada tariffs; seeking med device carve-outs; largest manufacturing footprint in the U.S. .
  • APM integration: High single‑digit growth ahead of deal model; R&D integration and ex‑U.S. revenue synergy planning underway .
  • Biosciences outlook: Cautious view on research funding; advocacy regarding export controls impacting high‑color spectral cytometers; not material at BDX level but being monitored .

Estimates Context

  • External consensus (non‑S&P): Adjusted EPS ~$2.98 vs actual $3.43 (beat), revenue ~$5.10B vs actual $5.168B (beat) .
  • S&P Global consensus retrieval was unavailable at time of analysis; therefore estimate comparisons rely on reputable external news sources rather than SPGI-provided consensus.

Key Takeaways for Investors

  • Margin expansion remains a central driver: BD Excellence is showing through in gross margin gains and operating leverage; sustained investment in R&D supports medium‑term growth optionality .
  • Alaris/Connected Care underpin near‑term growth, with pipeline upgrades (OTA software, EtCO2) strengthening competitive differentiation and pricing power .
  • Separation is a meaningful medium‑term rerating catalyst: “New BD” is set to sharpen capital deployment (including tuck‑in M&A) and potentially accelerate WAMGR; the pure‑play Life Sciences & Diagnostics entity may command tools/diagnostics multiples .
  • Watch transitory headwinds: China and biosciences research funding, and PS destocking, temper 1H growth; management has derisked H2 and maintained organic growth guide .
  • FX sensitivity increased: Translational FX raised the revenue headwind and EPS drag, but operational strength supported an EPS midpoint raise; monitor DXY/EUR for guide risk .
  • Capital returns intact: $750M repurchased in FY25 to date and fresh 10M share authorization plus ongoing dividend signal confidence in cash generation and deleveraging path .
  • Near‑term trading: Expect focus on separation milestones, margin trajectory, Alaris order book, and Q2 licensing headwind phasing; medium‑term thesis centers on durable recurring revenue (>90% for “New BD”), margin accretion, and innovation cadence .